To be in a negotiation can be tough. Procurement officers are trained to get the best deal out of you. Their job is to squeeze you on price as much as possible. After all, a lower price means they are taking costs out. With that, they have done their organization a huge favor. To get the best results they will use several tactics, ranging from artificial delays to surprise stakeholder appearances.
What tactics could you apply to get the best out of the negotiation-situation?
Avoid the onion. To me, negotiation is like peeling an onion. Layer after layer, it just gets worse. Although you don’t want it to, negotiating badly will make you cry. The best thing you can do is not to get into a negotiation situation. This is hard work. But as a Trusted Advisor, you can do it. Ask yourself: Have you understood the objectives of all stakeholders involved in the buying process? They all have different agendas. You need to deliver the value they are after. For the Operations Officer, it is efficiency gain, for the CFO a reduced overall cost. The owner needs a solid ROI.
Make your conversations about producing better results for the company through change. Act like a business person, not as a salesperson. Address why staying with their status quo would not give them the results they are looking for. Share insights and ideas that would help your prospective customer understand why they need to change. Work on building consensus. This is your best outcome – do not let it come to negotiation.
Introduce your higher price early. This is a tactic that not many salespeople use. Why not? Because we have not been trained to do so. But, contrary to traditional sales processes, introducing your higher price early often pays off. The more your solution will help to gain a strategic advantage for your dream customer, the more they are willing to pay. If, in your opinion, you are the best available option, then with confidence, tell the stakeholders they need to invest to get the results they want.
Verify you are the finalist. Despite all your efforts to sell with the buyer’s perspective, there may come a time where your contact just tells you to sharpen your price. Beware not to agree to that request too soon. Give yourself one more round to sharpen your value. But if you really have to, before accepting to go into negotiation, ensure your dream customer has stopped considering other competitors. If not, then you allow your dream customer to have options and leverage, giving them more power in the price negotiation. Eliminate the other finalist first.
Explain the delta. The request to sharpen your pencil is actually a good sign. It means there is a willingness to buy. Your first task is to bring clarity. Explain why the delta between you and your competitor’s charges is required to deliver the value your prospective customer needs. If you cannot explain why you are more expensive then you already have lost half the battle.
You negotiate, not your manager. Do not offer to speak with your manager about a better price. This will immediately lower your credibility as a peer and indicate you believe the strategic value you deliver is worth less than your initial proposal. You need to believe in the price you offer and that it is a fair price for the value you will deliver.
Concessions and collaboration. But, procurement will not give in easily. The time for concessions arrives. Ask for something equal to or greater than the value of what you give. This is what you have discussed with your manager beforehand. There will only be a win-win through collaboration.
Retain the power to walk away is probably the toughest thing to do. Realize that your company needs to make the margins to reinvest back into their business. By letting a deal go, it doesn’t mean you have negotiated badly. On the contrary, you have protected your company from delivering a service at a non-profitable price. Giving yourself the option to walk away, puts yourself in a stronger position to negotiate.
Your strategy is not to negotiate, but if it comes to it, you better know the tactics you have at hand to avoid the tear shedding.
Click * LIKE or share with others if you think this post was useful.